KPMG Weekly Tax Review 17 FEB - 24 FEB 2025
Directions of operation and development of Ministry of Finance for 2025-2028.
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Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
During the sitting of the Sejm held on 20-21 February 2025, two acts bringing amendments to the Polish tax law were passed. As a result of the amendments to the Tax Code, the submission of a letter in paper form affecting compliance with the deadline will be possible at any postal operator within the meaning of the Polish Postal Law, and not only at a branch of Poczta Polska [Polish Post] as has been the case so far. The Tax Code will also be adjusted to the judgment of the CJEU in case C-322/228 dated 8 June 2023, to allow taxpayers continue to receive interest until the overpaid tax is refunded. The new rule is to apply to overpayment due to favourable judgments of the CJEU or the Polish Constitutional Tribunal. Amendments were also brought to the Excise Duty Act, introducing excise duty on new products such as refillable e-cigarettes, heaters, multi-use devices, accessories and nicotine pouches. Excise duty on liquids for single-use e-cigarettes was also increased. The Acts now move to the Upper House of the Polish Parliament. The amendments to the Tax Code are to enter into force 14 days after publication in the Polish Journal of Laws, while the amendments to the Excise Duty Act start to apply on 1 April 2025.
The preliminary remarks to the bill amending the Polish Tax Code and certain other acts have been published on the website of the Chancellery of the Prime Minister. The bill seeks to improve the relationship between taxpayers and tax authorities. The key amendments brought include a revision of the rules on the statute of limitations for tax liabilities, especially those secured by a mortgage or fiscal pledge, and a modification of the conditions for suspending the running of the statute of limitations in fiscal criminal proceedings. Furthermore, the bill provides for adjusting the methods of reporting tax arrangements for MDR purposes and relaxing penalties for late reporting. Additionally, the goal of the amendments is to improve the efficiency of tax authorities, e.g., through simplifying the procedures related to assigning the Tax Arrangement Number [Polish: Numer Schematu Podatkowego, NSP].
According to the judgment of the Supreme Administrative Court in case II FSK 633/22 dated 18 February 2025, a taxpayer is authorized to make retroactive modifications to depreciation rates for past taxable years, with effect from the ‘first month’ of the given taxable year. The possibility to reduce depreciation rates is expressly provided for in Article 16i(5) of the CIT Act. Changes to the rates can be made starting either from the month in which the corresponding assets were entered in the records or from the first month of each subsequent taxable year.
Importantly, the provision does not impose any limitation in time, so that rate changes made in this way may also be applied to earlier periods. In fact, the restriction on the possibility of ‘retroactively’ modifying the amount of depreciation (deductible costs) made, and thus also the taxable base, is linked to the statute of limitations for tax liabilities (Article 70(1) of the Polish Tax Code).
On 20 February 2025, the order of the Minister of Finance dated 15 February 2025, on the directions of operation and development of the Ministry of Finance for 2025-2028 was published in the Official Gazette of the Minister of Finance. The Ministry envisages four lines of action: transparent and secure public finances (the aim is, inter alia, to increase the efficiency and effectiveness of tax collection); sustainable development of the tax system and professional and modern customer service (the aim is, inter alia, to simplify tax regulations and procedures and to increase Poland's tax competitiveness); a modern financial market (the aim is, inter alia, to eliminate regulatory barriers and create an environment conducive to development, including, for example, the introduction of REITs); and strengthening the organization's ability to perform tasks effectively.
According to the judgment of the Supreme Administrative Court in case I FSK 1797/21 dated 19 February 2025, when interpreting Article 108a(1d) of the VAT Act, in line with the laws in force in Poland in the period from 1 November 2019 to 3 December 2020, to rely solely on grammatical interpretation may prove to be substantively incorrect. It is a well-established view in jurisprudence that, given that VAT is subject to mandatory harmonization with EU law, particular attention should be paid to the value and economic effects of the transactions in question, having also regard to the objectives which the related provisions are intended to achieve. Therefore, it had to be concluded that the set-off described by the company in its application does not contain significant differences from the set-off referred to in Article 498 of the Civil Code.
Consequently, Article 108a(7) of the VAT Act will not apply to the settlement of liabilities by way of set-off.
According to the judgment of the Supreme Administrative Court dated 19 February 2025 in case II FSK 651/22, subsidies from the Guaranteed Employee Benefits Fund (GEBF) used to co-finance remuneration of employees engaged as part of the Special Economic Zone (SEZ) activities (pursued under a relevant permit) shall be treated as revenue from income tax-exempt activities in line with Article 17(1)(34) of the CIT Act. In the Court's opinion, there is a close and indissoluble functional connection between subsidizing employees' salaries from GEBF and the company's economic activity conducted in the SEZ on the basis of the permit, and therefore such subsidies are an integral part of the SEZ activity.
Receiving a subsidy from GEBF was an exceptional and specific situation and therefore, despite doubts that may arise from a literal interpretation of the provision, the subsidy in question is revenue from exempt activity.
According to the judgment of the Supreme Administrative Court in case II FSK 609/22 dated 19 February 2025, pursuant to Article 7 of the Poland-Denmark DTT, a permanent establishment (PE) in Poland can only exist if profit can be attributed to it. However, since the description of the facts clearly indicates that no income (revenue) will be generated in Poland by the Danish company, i.e. no profits can be attributed to it, there are no grounds to assume that a permanent establishment will exist in the territory of Poland. The mere presence in the territory of Poland of employees performing auxiliary and preparatory tasks is not sufficient to assume that a permanent establishment has been created.
Thus, there are no grounds for taxing the revenue from a permanent establishment in the territory of Poland, as there is no such revenue.
